LOS ANGELES — The Biden administration announced a Medicare price negotiation plan that looks to help millions of Americans with the costs of prescription drugs.

As part of the Inflation Reduction Act, Medicare will now can negotiate the price paid for 10 commonly prescribed drugs. The list is expected to grow to 60 drugs by 2029.

“It truly is historic,” said Peter Lee, the former executive director of Covered California. “It’s surprising. It is historic because America is the only country on Earth, of developed countries, that doesn’t negotiate with pharmaceutical companies.”

Lee joined “Inside the Issues” host Amrit Singh to discuss President Joe Biden’s plan to reduce health care costs for millions of Americans.

Lee says about one out of seven people on Medicare are using the 10 drugs that are part of the first round of price negotiations that are set to take effect in 2026.

“Their out-of-pocket averages from about $100-$200 up to $5,000 a year. This will change that by cutting those costs close to in half, so this is a very big step,” Lee said.

Lee was the founding executive director for Covered California, the state run insurance marketplace. He spent over 10 years seeing the changes in the health care industry.

“There’s a number of drivers that goes into what goes into health care costs… the biggest driver in the last 10 years, that’s going up faster than anything else is drug costs,” Lee said.

He added that there is a benefit that comes with that of drug companies developing new drugs that treat diseases more effectively than before.

However, the inability to negotiate drug prices leads to drug companies being the sole decider in the cost for the drugs.

“Up ‘til now [drug companies] could charge whatever they wanted, and the law said Medicare can’t negotiate. This is saying ‘let’s negotiate, have a fair price,’” Lee said.

When it comes to what negotiating will look like, Lee says Medicare and the drug companies are going to have to find a common ground that benefits both the millions of Americans relying on the drugs and enough for the companies to maintain a steady profit.

“We’ll say you have to negotiate, and you have to negotiate in good faith. If you don’t, you’re going to get a penalty,” Lee said.

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